Not sure about everything, but try either Rendering it as .WMV (I'm assuming you have Windows since you have WLMM) or an .MP4

I forgot the settings to do in Sony Vegas, but it also deals with recording.
There should be something in it to get rid of the black bars, I just can't remember right now.
Pretty sure there are vids about it.

Make sure the screen ratio is 16:9.

Black bars on the side usually mean the video isn't at the 16:9 ratio so instead of stretching it and making it look crappy, they leave it and add black bars.

Black bars all around, I think that's from when you save the video either some format too small OR when you saved it in Vegas or WMM it was smaller than the project video. *shrug* I don't know exactly, usually people only get black bars on the side. Unless the black bars up top are part of the video you recorded and put into the program.

In any which case, it's a simple fix.

1. Start New Project and make sure you set the video WIDTH to 1920 and video HEIGHT to 1080. This will be 1080p and is also a 16:9 ratio so it will be the highest quality you can get.
2. Drag and drop that image into sony vegas (Windows movie maker doesn't have the power to do overlays and poop. Or at least not without a bunch of troubling non-working crap. You want the picture behind your video, so put the video track for the video ABOVE the one for the picture.
3. Then all the way on the left click (of the video track of the picture) the button that looks like a white window with an arrow pointing to a blueish one. Says Track Motion when mousing over.
4. In this new window it should show a box (your video/pic) with a circle inside it. Defaultly it will keep your aspect ratio, so change the WIDTH to 1920 on the left. if the HEIGHT does not automatically change to 1080, then your picture will not 100% show. If it's lower than 1080, keep making it bigger until it is. Because if it sticks out too far, fine you won't see all the picture. But if its not far enough then you'll have horrid black spots near the edges.
5. Type in something like Full Screen where the drop down box at the top is and click the save button to the right of it. This way you can easily set other pictures in the background by just doing this on their video tracks and clicking full screen.
6. Close that window and you're done. If you need to move the picture (because it stuck out too far and cuts off her face instead of the other side) go back in there and drag the box (and watch the preview screen) or use the arrow keys to go 1 step at a time for perfection.

Hope it makes sense D: I can do pics or something but I just didn't feel like it if I didn't need to XD.

Did you try this?

Right-click the clip with the black bars > Properties > Check off 'Maintain Aspect Ratio' > OK

If that leaves you with a few black bars

Go to Video Pan/Crop and zoom in so that the remaining black bars vanish.

I hope I helped (Y)

P.S : Also, don't play with the background clip. Leave it as it is.

*Brofist*

Thats about right but you have to extend it even bigger. And yes you can unlock the aspect ratio with one of those buttons in that area that you're in on top.

If you unlock, the image will be stretched, which could be ugly.

If you don't unlock, you'll have to make it so big that it'll chop off some automatically. The choice is yours. XD. Stretching won't look that bad I'm sure, its not a huge one.

Edit: And it also looks like whatever you recorded, recorded the black bars as well. You'll want to record it in a nice resolution that doesn't box it. Because THAT box, you can't get rid of, because it's part of the video. Well you can, but you'll have to crop your current video which isn't that hard, then put THAT into this project.

hmmm... I recommmend not to stretch the PSX gameplay and keep it in the native resolution.

Copied from other topic :
Hmmm... this is I think not the thing that will work on how pewdie did his vids with the silent hill thingy (I think he asks on how he did it).

I guess he uses 2 layers were one has the 4:3 ratio and one has 16:9

The 4:3 is obviously the gameplay of the game and should be the top/first video layer while the second (the 16:9 , the background thingy) is the bottom/second layer. If my theory is correct for sony vegas , then you have the same thing pewdie has in his video (although I didn't test this yet in Sony Vegas , so I don't know if it will work xD)

^--- The above will work , just tested it yesterday

An example prototype below


The red indicates where the video should be

just make the picture 1280x720 or 1920x1080

I always render it on MP4 720p which outputs around a 1-2 gigabyte file and then I use handbrake to shrink it down to 200-300mb.

Looks also better then rendering in WMV imo , or it could just be my settings.

I render stuff with a custom setting which is based on XDCAM EX (*.MP4)

Its a modification of HQ 1280x720-24p, 35 Mbps VBR where I have change the frame rate from 23.997 to 25 , since that is the actual framerate of my recordings. Don't know if its the best setting for the best quality and size , but it is something that my low-end PC can handle while the footage looks nice.

Actually I do not know that much , I basically fooled around with it. thats how you learn things , play around with it.

Did you get it to work?

How does it look like now?